Fish On! Hooked on Highliner

Yesterday I made the decision to start a new position in Highliner. I have talked about how I think it’s a great buy and with the nod of one of my reader’s Cris, I decided to pull the trigger.

About Highliner

High Liner Foods Incorporated is a Canada-based company, which is engaged in the processing and marketing of frozen seafood products. The Company produces a range of products from breaded and battered items to seafood entrees, which are sold to North American food retailers and foodservice distributors. Highliner operates through Canadian Operations and U.S. operations. The Company offers its products under Foodservice and Retail brand. The retail channel includes grocery and club stores and its products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel, Sea Cuisine and C. Wirthy & Co. labels. The foodservice channel includes sales of seafood that are sold through distributors to restaurants and institutions under the High Liner, Icelandic Seafood1, Mirabel and FPI labels. It owns and operates three food-processing plants located in Nova Scotia, New Hampshire and Virginia. (source rbc direct investing)

Our Purchase

We bought 150 stocks for 2,052.95. $9.95 for the trade and each stock was $13.62. The yield on cost is 4.10% which is really high for a defensive stock. Highliner has raised it’s dividend for the past 9 years. Its quarterly payment will bring in $21.00 if the dividend stays at current levels. Unfortunately high liner doesn’t offer a drip program. Arggg. But I feel the potential is there for the stock to rebound. I love buying stocks at 52 week lows.

I also love to buy stocks we use. We have been eating high liner foods for years and their new pan seared fish is great! It’s always nice to preset the oven when I get home, have a shower and then throw in the fish for 20 minutes at 375 degrees and walk the dog. Set it and forget it!

I know the argument that right now people are going with fresh foods, no preservatives etc etc. Life’s busy and also fresh is more expensive. I think currently we are living in a time where everyone has money to spend. Seems like most people have pretty new cars and have easy credit. Well interest rates are rising, and Canadian’s have record amounts of household debt. I believe its a matter of time before people start eating the cheaper stuff again.

Conclusion

This purchase will add another $84.00 in yearly dividend’s for us. I don’t know how long of a hold this will be as I think the oceans are slowly getting fished out. I will hopefully watch this stock rebound and decide what to do then, right now though I’m hooked on highliner! Do you eat highliner products? What’s your favorite?

In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey!

20 Responses

I’m on the fence about this one. Everyone has to eat, High Liner has a very loyal following in Canada (and growing in the USA and elsewhere) and it’s at annual lows. However, I have two causes for concern; 1. product supplies 2. recalls.

1. I’d like to buy and hold my dividend stocks (we’re currently in the process of living off our passive income) and like you said, I’m not sure how long their supplies will last. Most of their products are from wild fish so not as sustainable as farmed (perhaps? I don’t know the fishing industry). Personally, I prefer farmed because I believe it’s more sustainable but maybe HLF’s customer base prefers their fish “wild”.

2. Most food companies have recalls, that’s not the issue, however, when they do, the costs can be significant. High Liner underestimated the latest one by about $9 million. I don’t know what their margins are but that could be significant. And, the recall didn’t have anything to do with the quality of the fish rather a “contamination” with milk products. With all the allergies out there, I’m a bit worried about the food production industries (I own a lot of food distribution).

Would you care to share the feedback that Cris shared with you that made up your mind for you?

Hey Sarah. Here is what cris said. I own HLF a nd I am thinking to add more… they had some recalls in the spring and the previous CEO (who run the company for 15 years) is back… I am confident that everything will get back to normal. Cris seems really knowledgeable but again its great to do your own research. Like you said this isnt a buy and hold for 20 years but i feel a great value buy. Congrats on almost living off the passive income!

I saw Cris’s comment on the previous post. I never heard of this company before. You see, I don’t like fish. But, I was looking to see what the company is doing.
It is nice that you were able to buy it.

Love buying a stock you use, no doubt. Currently typing this comment while flying Delta (DAL), an airline stock I purchased a bit ago and guess what – the experience I am receiving now is quite enjoyable. Congrats on the big purchase, that reinvestment should be very nice!

Just a few more insights about the HLF…
I own the company for a while and last week I added 100 more shares at 13.69.
This year the company had to deal with some recalls which cut the profit (in 2nd quarter) and the shares lost around 30% in value.
Overall the health of the company is good and the dividend is sustainable but here are a few more things which make me to believe that the shares are at the bottom and from here will continue to increase:
-in the last 3-4 years the bottom was around $13 and at this level is a resistance for the stock
-The RSI is up, over 30 after hitting 13 in the last couple weeks
-the volume was high in the last 2 weeks so, this predict that the bottom was hit…
-they appointed back the previous CO, who mostly created the existing companyhttp://www.newswire.ca/news-releases/demone-returns-as-chief-executive-officer-of-high-liner-foods-640391823.html
-all the ratios are half if you compare with the industry (p/e, p/B, p/s)…
-my own valuation gives a value of $18-$19 per share…

Nobody can predict the market but increasing the odds in your favor can be the key.

I have known the High liner brand for years now. I used to buy their frozen salmon fillets all the time because their salmon were wild caught.

When I buy dividend paying stocks, on of my most important criteria is the continuous dividend payment history. The second is the number of consecutive dividend increases. Other financial numbers can be fudged and manipulated here and there, but the dividend is hard to fake. Good buy.Leo T. Ly recently posted…12 Personal Financial Questions That Everyone Should Know

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Disclaimer - Passivecanadianincome.ca is for entertainment purposes only. I am not a professional and the thoughts and views are my own. Please do your own research before making any financial purchases.